Prisoners Take Advantage of Credit Program

By Faye MergelPublished: Friday, July 9th, 2010

The home-buyer tax credit has demonstrated its popularity with millions of new homeowners since its introduction.

However, if a Treasury report will be believed, it is also very popular with criminals who are being alleged with claiming the tax credit despite their being imprisoned, thus defrauding millions from legitimate tax payers.

A percentage of the inmates who received checks from the government were serving their life sentences for a myriad of offenses. The Treasury Inspector general prepared a report which estimates that more than a thousand inmates filed falsified claims amounting up to 9.1 million dollars.

In the big rush to make the First Time Homebuyer Credit accessible without delay to homebuyers who exceeds 2.6 million, a small quantity of payments was made to imprisoned people erroneously. The Internal Revenue Service is now taking all available measures in order to recapture the funds which were given to prisoners by mistake and to keep this from happening again. According to the IRS, all instances of improper prisoner payment will be followed upon and in addition, rapid and proper actions will be enforced.

The report also found out that the Internal Revenue Service accepted numerous claims that were filed on the identical home. It is found by investigators that the problem lies under the tax credit program since the IRS did not originally obliged taxpayers to provide documentation and other proofs to prove that they indeed bought a home.

Numerous improvements have been completed and only a small fraction of prisoners were able to defeat the system, according to IRS officials. They also claim that the Internal Revenue Service blocked or refused almost 400,000 doubtful homebuyer claims. In addition, the stronger protective measures employed by the IRS even opened more than 150 investigations.

The Internal Revenue Service says that their efforts to strengthen their defense against these fraudulent claims saved taxpayers more than $1 billion.

The Internal Revenue Service persuades Congress to ratify legislation which enables the IRS the information it needs on all federal, state and local prisoners. This is due to the simple reason that the IRS currently doesn’t have access to accurate information on all prisoners. The simple act of providing the IRS the information it needs enables it to construct an efficient system for blocking claims by prisoners

The Homebuyer Tax Credit program which has expired at the end of April, has granted up to $8,000 for more than 2.6 million first-time homebuyers. The program also gave a weakening housing market the boost it badly needs. The National Association of Realtors also estimated that the percentage of homebuyers who would not have closed the deal last March without the aforementioned program reaches up to 44 percent.

Separating the genuine first-time homebuyers from the criminals in prisons is a job that the IRS takes seriously.